COMPANIES, P2 MARKETS, P9 INTERNATIONAL, P8 STEPPING AWAY FROM CHINA STANDOUT PERFORMER BLOCK MULLS LEGAL ACTION Apple’s supplier Pegatron in talks for second India factory India poised to outperform Asian & EM peers: Chris Wood Jack Dorsey’s wealth tumbles $526 mn after Hindenburg report NEW DELHI, SATURDAY, MARCH 25, 2023 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL XLIX NO. 21, 22 PAGES, `10.00 (PATNA & RAIPUR `10.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 57,527.10 ▼ 398.19 NIFTY: 16,945.05 ▼ 131.85 NIKKEI 225: 27,385.25 ▼ 34.36 HANG SENG: 19,915.68 ▼ 133.96 `/$: 82.48 ▼ 0.22 `/€: 88.47 ▲ 1.08 BRENT: $74.29 ▼ $1.62 GOLD: `59,545 ▲ `489 Forex kitty jumps by $12.8 bn to $572.8 bn INDIA'S FOREX KITTY rose by $12.798 billion to $572.801 billion in the week ended March 17, the Reserve Bank said on Friday, reports PTI. ■ PAGE 9 Airtel pips Jio in 5G, now in 500 cities BHARTI AIRTEL OVERTOOK Reliance Jio in 5G roll-out with the expansion of the network to additional 235 cities, taking its total reach to 500 cities, reports PTI. ■ PAGE 2 No Twitter blue tick without fee from Apr TWITTER ON FRIDAY announced that it will start removing the blue tick for legacy verified accounts from April 1 worldwide, which means that users will have to pay subscription to retain their blue ticks. ■ PAGE 22 FE S P E C I A L Toyota Hilux review: Adventure outside, comfort inside The Hilux is a true-blue 4x4 go-anywhere SUV. But on this side of Paris Agreement, do you need SUVs like this? ■ MOTOBAHN, P7 INSIDE 58,200 58,050 57,890.66 398.18 Points 0.69% 57,900 57,750 57,600 Previous close: 57,925.28 57,450 57,300 NEW PROPOSALS Capital gains ofinvestors in debt fundswith 35% or less ofAUM in domestic equities to be taxed at I-Tslab rate; No concept of LTCG any longer, indexation benefits go too STTon futures and options raised by 25%; hike to impact high frequency traders and compress overall tradevolume: Retail investors may get to increase share Return on capital from InvITs/REITs to be taxed at slab rate, but only after adjusting for the cost ofacquisition: redemption not necessary condition T V SOMANATHAN FINANCE SECRETARY Income earning instruments should be treated as income earning instruments, that is the direction in which it is going Withholding tax royalty and fees for technical services earned by foreign companies doubled to 20%; may hamper technology imports, but spur R&D units by foreign firms in India 10-year tax holiday for offshore banking units in GIFT City; Withholding tax rate for dividends received by nonresidents halved to 10% Panel set up “to look into the issue ofpensions and evolve an approachwhich addresses the needs ofemployeeswhile maintaining fiscal prudence” indexation on gains from longer holdings. With bank deposits attracting income tax at slab rate, the comparative benefit of debt MFs used to be more in high-inflation periods, thanks to the indexa- STT hike to impact high frequency traders ■ PAGE 4 tion facility. While banks are expected to benefitfromhigherdepositinflows, the juryis out onwhethertax parity between term deposits and debt funds will increase the funds avail- Nil tax for income a tad above `7 lakh ■ PAGE 5 able for investments and lead to an incremental push to capital formation.Since the totalvalue of savings won't be altered by the step,impact on investments would at best be marginal. Banks FDs to become more attractive ■ PAGE 4 Insurance sector expects surge in demand ■ PAGE 5 57,527.10 Open Close It was proposed in the Budget that capital gains earned on redemption of market linked debentures (MLD)would be treated as short-term capital gains taxable at slab rates without indexation benefit, irrespective of the holding period.The new proposal is to treat MLDsanddebtmutualfundsatpar. Sales of options in securitieswill attractsecuritiestransactionrateat 0.0625% effective FY24,as against the current rate of 0.05% and the rate for futures will change from 0.01% to 0.0125%. The move would hit high frequency traders (hedgers) and will have a marginalto-significant impact on overall trade volumes, the abundance of whichhelpsinpricediscovery.Retail investorsmaygettoslightlyincrease their share in tradevolumes. Another amendment would reduce the burden on infrastructure and real estate investment trusts (InvIT/REIT) from the proposed new income tax at slab rate on amortisation of debt in the hands of the unit holders. Debt repayment bythe trusts being a significant income stream for the investors in these instruments (dividends and interest/rental incomes are the other components), but haven't been subject to tax so far. According to the new amendment, the tax will be restricted to the excess sum received by them over the issue price, that is, the initial investment,and not on the sum including the initial capital, as was originally proposed. THE FINANCE BILL amendment that removed long-term tax benefits for debt funds took a toll on shares of asset management companies (AMCs) on Friday. Shares of UTI AMC,Aditya Birla Sun Life AMC and HDFC AMC declined over 4% whereas Nippon Life India lost 1.29%. According to industry players, around 35% of the `13-odd trillion debt fund investments would be impacted bythisdecision.However, the relief is that the new guidelines willcomeintoeffectonlyfromApril 1, which means that the existing investments will be grandfathered andwill continue to get tax benefits whenever they are withdrawn. Nilesh Shah, MD, Kotak Mutual Fund,said,“Thiswas an unexpected announcement. However, the grandfathering of the existing investments will help investors. There would be a slowdown in the deepening and development of the bond market.” Industry players said the slowdown in funds will happen, especially from corporates, high net worth individuals and family offices. Radhika Gupta, MD and CEO of EdelweissAMC,in a seriesof tweets, called the move an “unfortunate step”, saying that debt funds have channelled a significant amount of 10-year plus money into the bond markets. She added that India requires significant borrowing owing to infra spends, and bond market liquidityhas been a concern for a long time. While MFs are institutional investors that aren’t hold-to-maturity,otherbond investors are,which implies long-term implications as borrowingswill return tobanks,she added. Continued on Page 5 AMC STOCKS END DAY IN RED Continued on Page 5 Corporate appetite for debt funds may wane ■ PAGE 4 (% fall) -1.29 FIVE HIGH-LEVEL EXECUTIVES from the Falguni Nayar-led fashion and beauty company Nykaa have resigned from their posts, a company spokesperson said on Friday, reports Tushar Goenka. ■ PAGE 2 FINANCE BILL, 2023 provedtohave an unexpected sting in the tail,with the government moving as many as 64amendmentsbeforeitwaspassed bythe Lok Sabha on Friday. The amendments included an unsettling tax blow to debt mutual funds,and a hike in the transaction tax on futures and options by 25% each. At a broader level, these and the severalotherchangesintheBill,which wastabledinParliamentonFebruary 1 along with a generally acclaimed andpain-freeUnionBudget2023-24, displayed the government's intent to ensurealevelplayingfieldamongdifferent asset classes and minimise arbitrageopportunitiesforinvestors, irrespectiveoftheirprofilesandeven domiciliarystatus. Finance secretary T V Somanathan made the government's stand clear when he said, “income earning instruments should be treated as income earning instruments, that is the direction in which it is going.” The changes also reflect a policy thrust to spurflowof funds into the real economyand the financial sector,asthemanytaxsopswithregard to the country's lone international financial services centre (Gujarat International Finance Tech-city or GIFT City) would testify. A few tax loopholes have been plugged diligently,as deft tax planners,including high networth individuals,largefundhousesandfirms have been found to take unfair advantage of them. All capital gains of debt mutual funds – those with 35% or less of assets under management in domestic equities – acquired on or afterApril 1,2023will nowbe taxed attheslabrateoftheinvestor.Asthe concept of long-term capital gains has been done away with for this asset category,its competitive edge with term deposits in banks will be blunted. Between the two, returns are comparable, especially for longer holdings, but a significant tax advantage has been available for debt MFs,where investors paytaxat the slab rate for holdings up to 3 years and a 20% tax with indexation benefits or 10% without SENSEX Intra-day, March 24 Nipppon Life India AMC Nykaa sees exit of five top executives KG NARENDRANATH New Delhi, March 24 Shriram AMC PUNJAB NATIONAL BANK on Friday raised `974 crore via additional tier-I bonds at 8.75% coupon rate, which is 35 basis points (bps) higher than its previous bond sale in December, according to sources aware of the matter, reports Piyush Shukla. ■ PAGE 9 address threat to pension reforms -3.21 PNB's AT-1 bonds sail through tax on royalty fee doubled SIDDHANT MISHRA & JOYDEEP GHOSH Mumbai, March 24 HDFC AMC EUROPEAN BANKING STOCKS fell sharply on Friday, with Deutsche Bank and UBS knocked by worries that actions by regulators and central banks have not yet contained the worst problems to face the sector since the 2008 global financial crisis, reports Reuters. ■ PAGE 8 long-term tax advantage ● Finance secretary-led panel to -4.21 Deutsche, UBS fall on financial crisis worries ● STT on F&O hiked by 25%; Aditya Birla AMC THE BOARD OF directors of NSE, in its meeting held on March 23, decided to roll back the 6% increase in transaction charges in cash equities and equity derivatives segments, with effect from April 1, reports fe Bureau. ■ PAGE 9 ● Debt mutual funds lose -4.44 NSE rolls back hike in transaction charges THE STING IN THE TAIL 35% of debt fund money may get impacted UTI AMC THE GOVERNMENT ON Friday hiked the DA for its employees and dearness relief for pensioners by 4%, reports fe Bureau. It also extended a `200 subsidy for up to 12 LPG refills per year to the beneficiaries of Pradhan Mantri Ujjwala Yojana for 2023-24. ■ PAGE 21 LOK SABHA PASSES FINANCE BILL WITH 64 AMENDMENTS -4.73 IN THE NEWS Govt hikes DA by 4%; LPG subsidy of `200 extended Big blow to Cong as Nexa’s next: Overtake Hyundai, Tata LS disqualifies Rahul MARUTI SUB-BRAND POSTS 47% GROWTH IN CURRENT FISCAL SWARAJ BAGGONKAR Mumbai, March 24 INTO ITS NINTH year of launch, Maruti Suzuki hopes to sell more cars through the Nexa chain of outlets than competitors Hyundai and Tata Motors to emerge as the country’s second largest brand by next year. On Friday, Maruti Suzuki announced cumulative sales of 2 million units from its Nexa’s network since the start of operations in 2015. It presently sells five models – Grand Vitara,XL6, Ignis, Ciaz,Baleno – through its network and will add two more, Fronx and Jimny, from April. Shashank Srivastava, senior executive officer, marketing and sales, Maruti Suzuki India said, “Nexa is currently number 4 in the industry and we hope to make it the second largest brand next year. It has contributed 23% of our overall sales this year.” Maruti Suzuki added that Nexa has seen a growth of 47% this year with sales of 370,000 units over FY22 when 255,000 units were sold.“Next year we are looking for sales to be close to 600,000 units,” Srivastava added. BALENO DRIVES NEXA NUMBERS ■ Maruti Suzuki announced on Friday a cumulative sales of2 million units from the Nexa’s network ■ Baleno remains the biggest volume generator for Maruti Suzuki from the Nexa range. It is also the country’s second highest selling model ■ Nexa has seen a growth of47% this yearwith sales of 370,000 units over FY22 when 255,000 unitswere sold ■ Tata Motors is expected to end FY23with sales of 540,000-550,000 unitswhile Hyundai may clock 560,000570,000 units Tata Motors is expected to end FY23 with domestic sales of 540,000-550,000 units while Hyundai is expected to see domestic volumes of 560,000-570,000 units in the year. Both the companies have not shared domestic vol- SHASHANK SRIVASTAVA SENIOR EXECUTIVE OFFICER, MARKETING & SALES, MARUTI SUZUKI Nexa is currently number 4 in the industry and we hope to make it the second largest brand next year. It has contributed 23% of our overall sales this year ume guidance for FY24 yet. The two latest additions in the Maruti stable – Fronx and Jimny – which are to be commercially launched next month,have collectively seen bookings of around 39,000, though prices of the two models are yet to be announced. Baleno remains the biggest volume generator for Maruti Suzuki from the Nexa range.It is also country’s second highest selling model. Srivastava expects the Baleno and Fronx to contribute most in terms of volumes at Nexa followed by Jimny and other models. Maruti Suzuki brought Nexa to alter its market image of a manufacturer of compact and affordable cars, since its experiments with larger and more expensive cars were not favourably received in the market.The brand was conceived to target the high margin aspirational buyer. “When brand Nexa was conceived, it was done keeping in mind a slightly more aspirational consumer. The monthly income levels of the Nexa customer is higher. There are less first time buyers in Nexa than Arena,” Srivastava added. Nexa has around 460 outlets presently across 280 cities. With new launches, the company is planning on expanding the network further. Its Arena brand has nearly 2,600 regular outlets while the number of outlets for used car brand True Value is around 560. LIZ MATHEW New Delhi, March 24 A DAY AFTER Congress leader Rahul Gandhi was convicted by a Surat court and sentenced to two years in jail in a defamation case over his Modi surname remark,the Lok Sabha Secretariat issued a notification Friday,announcing that he is no longer a member of the Lower House. The Wayanad Lok Sabha seat, which he represented, is now vacant. Gandhi will be barred from contesting elections for eight years unless the conviction is stayed by a higher court. The Congress called the disqualification an attempt to“silence”his voiceandsaiditwouldfightthebattle legally and politically. The BJP dismissed the charge and said the disqualification was“lawful”. The notification was issued hours after Gandhi made a brief appearance in Lok Sabha. Reacting to the notification, Gandhi, in a Twitter post in Hindi, said, in Hindi. “Mein Bharat ki awaz ke liye ladh raha hoon. Mein har keemat chukane ko taiyyar hoon (I am fighting for the voice of India and I am ready to pay any New Delhi Congress leader Rahul Gandhi leaves Parliament on Friday PREM NATH PANDEY price for it).” Earlier,heentered theLokSabha minutes before 11 am – when the day’s proceedings commenced – and stood near his seat, watching his agitated party colleagues seeking permission for him to make a statement on the floorof the House but did not get a chance. Continued on Page 10
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